MUMBAI: An investment firm of conglomerate Tata Group, with no analyst rating and minuscule ownership by institutional investors, has become the top-performing Indian stock this year, the latest showcase of the frenzy in local equities.
Tata Investment Corp has soared 116% so far in 2024, the most among the Nifty 500 Index companies that represent more than 94% of India’s market capitalisation.
The stock has led a US$58bil rally in Tata Group companies since the start of the year, with about a fifth of it coming last week alone, driven by expectations of Tata Sons’ initial public offering (IPO) next year.
There has been some excessive behaviour in the bull run, and Tata Investment is a prime example, said Abhilash Pagaria, strategist at Nuvama Wealth Management Ltd. The stock’s low liquidity and small market capitalisation have amplified price swings, and a downturn can be expected, he said.The company’s shares fell by the 5% daily limit Monday, their worst daily performance since Dec 20, after the Times of India reported Tata Sons is exploring options to avoid an IPO.
The recent rally comes as the “froth” in small- and mid-cap stocks draws the attention of the Securities and Exchange Board of India. The market regulator last month asked mutual funds to protect investors amid concern that some parts of the nation’s US$4.5 trillion stock market have become overly exuberant.
Tata Sons holds 68.5% stake in Tata Investment, which has dividends from investments as its only source of revenue. — Bloomberg
